Correlation Between NAKED WINES and TOWNSQUARE MEDIA

Can any of the company-specific risk be diversified away by investing in both NAKED WINES and TOWNSQUARE MEDIA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NAKED WINES and TOWNSQUARE MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NAKED WINES PLC and TOWNSQUARE MEDIA INC, you can compare the effects of market volatilities on NAKED WINES and TOWNSQUARE MEDIA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NAKED WINES with a short position of TOWNSQUARE MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and TOWNSQUARE MEDIA.

Diversification Opportunities for NAKED WINES and TOWNSQUARE MEDIA

0.35

Correlation Coefficient

NAKED WINES  TOWNSQUARE MEDIA

Weak diversification

The 3 months correlation between NAKED and TOWNSQUARE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and TOWNSQUARE MEDIA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOWNSQUARE MEDIA INC and NAKED WINES is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NAKED WINES PLC are associated (or correlated) with TOWNSQUARE MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOWNSQUARE MEDIA INC has no effect on the direction of NAKED WINES i.e., NAKED WINES and TOWNSQUARE MEDIA go up and down completely randomly.

Pair Corralation between NAKED WINES and TOWNSQUARE MEDIA

Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the TOWNSQUARE MEDIA. In addition to that, NAKED WINES is 1.59 times more volatile than TOWNSQUARE MEDIA INC. It trades about -0.01 of its total potential returns per unit of risk. TOWNSQUARE MEDIA INC is currently generating about 0.05 per unit of volatility. If you would invest  590.00  in TOWNSQUARE MEDIA INC on September 12, 2024 and sell it today you would earn a total of  335.00  from holding TOWNSQUARE MEDIA INC or generate 56.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NAKED WINES PLC  vs.  TOWNSQUARE MEDIA INC

NAKED WINES PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NAKED WINES PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NAKED WINES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TOWNSQUARE MEDIA INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TOWNSQUARE MEDIA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NAKED WINES and TOWNSQUARE MEDIA

The main advantage of trading using opposite NAKED WINES and TOWNSQUARE MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, TOWNSQUARE MEDIA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TOWNSQUARE MEDIA will offset losses from the drop in TOWNSQUARE MEDIA's long position.

The idea behind NAKED WINES PLC and TOWNSQUARE MEDIA INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.